The Week in Review: Diamond in the rough

There is no scandal so minor MPs will be able to live up to it. As each one comes, they respond slowly and then fall into the same pattern of party-political recrimination you have come to expect. And so it was with the Libor row.

The week started in glorious political sunshine, when a rich banker resigned. Marcus Agius, bit part player in Gladiator and part of the Barclays cabal, stepped down as chairman of the bank.

Never before had so many been so angry about something they barely understood. But, as in Gladiator, the sight of blood calmed everyone down slightly. It was, however, a blink-and-you'll-miss-it event. By the next day he was back in the job.

Bob Diamond had taken the chairman's place as the sacrificial zillionaire. The smooth-talking American made the process as painful as possible for journalists by preceding his resignation with a memo to staff saying he was not going to resign. Several newspapers led with that, only to hear him announce his resignation early the next day, just as their readers were perusing the now-absurd front page. CEO Jerry del Missier, who actually admits ordering the reduction in the bank's Libor rating, followed in the afternoon.

Back in Westminster, politicians responded to the row by trying to gouge each other's eyes out, which is really the only thing they know how to do. David Cameron and George Osborne wanted a joint-parliamentary inquiry into the scandal (quicker, cheaper, greater chance of reprising the 'Labour made the financial crisis' line by 2015). Ed Miliband and - to a lesser, possibly non-existent extent - Ed Balls wanted a judge-led inquiry (broader, independent, more 'Labour-on-the-front-foot').

Osborne threw a few breadcrumbs – evidence under oath, that sort of thing – but Miliband wasn't having it. He really only has that one trick, the one he learned during the phone-hacking scandal: Go further than the PM, demand heads, call for a public inquiry, say you're leading the agenda. He is intent on reusing it on any story which stays on the front pages for longer than a weekend. By the time PMQs came along Cameron and Miliband were attacking each other viciously over a subject they broadly agreed on.

And then something interesting happened. Barclays released a statement saying someone at the Bank of England had called them in 2008 to say that someone at the Treasury (stay with me) wanted Barclays to 'lowball' their Libor rating. It was all so the market would be convinced of the bank's liquidity. But who was that someone in the Treasury, if indeed they existed?

Diamond, appearing before MPs in an annoying and misjudged Treasury committee session, refused to name names. But importantly, he did admit it was a minister and not an official. He spoke repeatedly about how much he loved Barclays, making even the most pro-bank Tory sneer. He purposefully misunderstood simple questions. Worst of all he called MPs by their first name. He survived, flanked by his posse of dour-faced lawyers, but he came out with very little respect. MPs weren't much better. Some of them performed adequately, but there was more than enough blame to go round.

At exactly the same time Osborne gave an interview to the Spectator in which he went a little too far in his attack on Ed Balls, suggesting he personally may have made that call to the Bank of England - or at least instigated it. By the next day, Balls upbraided the chancellor for it in the Commons, in the worst-tempered parliamentary debate for a very long time. It really was viscous. Political hacks in Westminster stopped what they were doing, turned up the TV, leant back, smiled and made a series of 'ooooh' noises, as if visiting a lap dancing bar or watching a particularly good football match. Balls denied the allegations as explicitly as possible and challenged Osborne to provide evidence or apologise. Osborne did neither, but immediately afterwards his aides whispered to the BBC's Nick Robinson that he didn’t have anything on the shadow chancellor.

It wasn't a great moment for the chancellor, who had corroborated Labour fears the parliamentary inquiry could become a witch hunt. And it wasn't a great moment for the Treasury committee, whose interrogation of Diamond suggested MPs may not be intellectually capable of conducting a Libor inquiry. But the government's majority won it the vote on the parliamentary investigation and Labour backed down. To do otherwise, and risk not having an inquiry at all, would have threatened any remaining public sympathy with either party